My parents would like to move near us in Manchester but cannot afford property prices. We are happy to pay half the value of the house. We already own our house. What are the implications for the purposes of stamp duty land tax (SDLT), capital gains tax (CGT) etc.? Could we put this into our children’s names? My parents are over 80 years old, so they need to think about inheritance (two sons) and funding a care home. What should we do?
Arthur Weller replies:
You would be better off lending or gifting the money (half the cost of the new house) directly to your parents, and letting them buy the house in their own names. Regarding putting half (or all) of the house into your children's names, it will affect their entitlement in the future to first-time buyer’s relief from SDLT. Furthermore, when your parents finish living in the house, either because they die or they sell it, if it is in their own name, there will be no CGT. But if it is the names of your children, there will be CGT when it is sold to a third party. If it is in the name of your parents, the residence nil rate band should be available to mitigate any inheritance tax liability.